Saudi Arabia dealt a high-profile snub to the international community and the United States on Friday when it turned down a rotating seat on the United Nations Security Council. The unprecedented move was a culmination of months of public derision directed toward the U.S. for its halfhearted approach to intervention in Syria, its tacit support of the Muslim Brotherhood in Egypt and, most recently, its overtures to Iran. High-level U.S. talks with the Islamic Republic, Saudi Arabia’s bitter regional rival, were the last straw. Last Tuesday, the head of Saudi intelligence services told European diplomats to anticipate a “major shift” away from the United States over disagreements on Syria and Iran policy. Recent Saudi rhetoric has been so severe that in it Israeli Justice Minister Tzipi Livni heard echoes of her own country’s politics: “When you hear the Saudis talk about what needs to be done to prevent [a nuclear] Iran, it sounds familiar,” Livni said.
Although Saudi Arabia’s vehement anti-Iranian sentiment is often framed in terms of regional or religious rivalry, talk of loosening the punishing international sanctions regime on Iran also prompts anxiety in Saudi Arabia for economic reasons. Ahead of largely positive negotiations between Iran and six world powers in Geneva two weeks ago, a senior U.S. administration official told Reuters that Washington is willing to offer “targeted, proportional” sanctions relief in exchange for Iranian steps to curb its nuclear program. An Iran unencumbered by the sanctions that have weighed on it for decades could put a serious dent in the Kingdom’s economic platform: oil exports. Fitch, the international credit rating agency, estimated that relaxed sanctions could soon bring 800,000 barrels of Iranian oil to market, driving global oil prices down. The head of global commodity and asset allocation research at Bank of America Merrill Lynch placed the drop in prices at a stunning 10 percent.
A severely cash-strapped Iran is very eager to bring foreign investment into the country of almost 80 million. On Sunday, Iranian Oil Minister Bijan Zanganeh predicted that sanctions relief could bring with it $54.4 billion in oil exports, of which $14 billion is already earmarked to fill gaping budgetary holes. American oil companies are already planning on it: top executives met with Zanganeh for “exploratory talks” on the sidelines of the UNGA earlier this month. Given the chance, European firms Total and Shell are also poised to reenter the Iranian oil market.
Oil is not the only Western business waiting for sanctions to fall in order to profit from a broad Iranian market. Less than a year after French automobile company Renault was forced out of Iran by U.S.-led sanctions, General Motors has been engaging in intensifying talks with Iran Khodro, the leading Iranian auto manufacturer, according to a report in Le Figaro. Other American companies have already been doing business in Iran under a shroud of secrecy—our sister site, Quartz, tallied at least $540 million in revenue for American companies doing business in Iran in 2012—and could enter fully if sanctions were lifted.
Certainly, regional politics are a worry for Saudi Arabia when it comes to Iran, but a direct threat to the Kingdom’s pocketbook is far more moving. For a country where petroleum exports account for roughly 90 percent of revenue, the prospect of a rival’s profit at great economic cost to Saudi Arabia demands action. Saudi Arabia’s recent polemic is largely a reaction to this threat and will not be mollified as long as Iran’s return to the international system is a possibility.